08:36 AM

GOOG Continues to Out Compete its Partner Sites

Google [GOOG] second quarter financial report disappointed Wall Street causing its shares to fall in after-hours trading. It also disappointed its partner sites that run Google advertising.

Google's partner sites generated revenues, through AdSense programs, of $1.66 billion, or 31% of total revenues, in the second quarter of 2008. This represents a 22% increase over network revenues of $1.35 billion generated in the second quarter of 2007 and a 2% decrease over first quarter 2008 revenues of $1.69 billion.

Google's own sites did a lot better:

Google-owned sites generated revenues of $3.53 billion, or 66% of total revenues, in the second quarter of 2008. This represents a 42% increase over second quarter 2007 revenues of $2.49 billion and a 4% increase over first quarter 2008 revenues of $3.40 billion.


Google makes more money from its own sites because it doesn't have to share the revenue with partner sites. And it continues to make investments that improve revenue from its own sites as opposed to its partner sites. Every quarter Google manages to shift more money to its online properties.

Foremski's Take: What kind of partner is Google? A lot of online media companies, as well as Silicon Valley startups with advertising supported web sites, rely on Google AdSense. The lower revenues from AdSense will hurt a lot of these startups.

This situation could help competing advertising networks, especially if they can offer a better return than Google. Unless Google can improve the performance of its AdSense it risks losing 31 percent of its total revenues. That's a lot of money.

See: Microsoft testing self-serve Adsense rival

siliconvalleynewswire.com » Lawsuit claims GOOG is defrauding advertising customers


Google Cuts Payments to Publishing Partners by $24m, Beats Analyst Estimates

Is GOOG Shafting Its AdSense Partners?

Reasons Why Media and Bloggers Should Not Run Google AdSense - Just Say No!

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